Despite just a handful of defaults during the month, the speculative-grade default rate ticked up in April, according to Moody’s Investors Service.
The trailing 12-month global speculative corporate default rate rose to 2.6% in April, up from a revised 2.5% in March, and up from 2.4% in April 2011, reports Moody’s. So far this year, a total of 26 Moody’s-rated corporate debt issuers have defaulted, including three defaults in April.
“After a surprising number of defaults in March, we’ve recorded only three events from two corporate families in April,” notes Albert Metz, managing director of credit policy research at Moody’s. “As yet there is no evidence that the default trend has truly changed. We continue to forecast a moderate default rate over the next year.”
The rating agency forecasts the default rate will rise to 3.1% by the end of 2012, and decrease to 2.8% in April 2013; which, it notes, is relatively low compared to the historical average of 4.8% since 1983. By sector, Moody’s expects default rates to be highest in the media: advertising, printing & publishing sector in the United States, and the oil & gas sector in Europe.
Moody’s distressed index, which measures the percentage of high-yield issuers that have debt trading at distressed levels, fell to 17.0% in April, from 17.2% at in March. A year ago, the index was much lower at 6.0%.